FSG 2009 annual financial report

1,280 views

Published on

Funeral Services Group Limited (BW) 2009 annual report

Published in: Investor Relations
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,280
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

FSG 2009 annual financial report

  1. 1. FSG – 04.08.2008 FSG LIMITED PROSPECTUS COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 FSG Limited Annual Report 2009 2009 ANNUAL REPORT
  2. 2. CONTENTSDETAILS PAGEGroup corporate information................................................................................... 2Group structure ...................................................................................................... 3Group mission and vision........................................................................................ 3Board of directors ................................................................................................... 4Financial highlights.................................................................................................. 6Chairperson’s report ............................................................................................... 8Group managing director’s report ......................................................................... 10Corporate governance .......................................................................................... 12Major shareholders’ list ......................................................................................... 14Group audited annual financial statements............................................................ 15Notice of annual general meeting .......................................................................... 51Proxy form ............................................................................................................ 53 FSG Limited Annual Report 2009 1
  3. 3. FSG LIMITED Annual Report 2009 FSG LIMITED GROUP CORPORATE INFORMATION PROSPECTUS COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 Incorporated in the Republic of Botswana Registration number: CO 2003/5108 Date of incorporation: 07 August 2003 Date of listing on Botswana Stock Exchange: 06 October 2008 Registered office: Independent Auditor: Plot 69124, Phase IV Deloitte & Touche Gaborone West Industrial, P O Box 778 Gaborone Gaborone Company Secretaries: Transfer Secretaries: Corporate Services (Proprietary) Limited DPS Consulting (Proprietary) Limited P O Box 406, Gaborone P O Box 294, Gaborone Bankers: Legal Advisor: Barclays Bank of Botswana Limited Collins Newman and Co; First National Bank of Botswana Limited P O Box 882, Gaborone Stanbic Bank Botswana Limited Standard Chartered Bank Botswana Limited 2 FSG Limited Annual Report 2009
  4. 4. Corporate Services (Proprietary) Limited DPS Consulting (Proprietary) LimitedP O Box 406, Gaborone P O Box 294, GaboroneBankers : Legal Advisors:Barclays Bank of Botswana Limited Collins Newman and Co;First National Bank of Botswana Limited P O Box 882, GaboroneStanbic Bank Botswana Limited GROUP STRUCTUREStandard Chartered Bank Botswana Limited__________________________________________________________________________________________GROUP STRUCTURE GROUP MISSION AND VISIONBOARD OF DIRECTORS Group Mission Group Vision 2 To provide funeral products and related services to To be recognised as the premier funeral service the community, in a caring, professional, dignified provider of choice in Southern Africa through the and compassionate manner, delivering maximum provision of exceptional customer service through value to our customers through innovative products innovative products and solutions and thereby and solutions and to be the leading funeral service building, enduring, and enhancing our relationship provider in our chosen markets. with our customers to the benefit of our stakeholders, employees, and the community at large. FSG Limited Annual Report 2009 3
  5. 5. FSG LIMITED PROSPECTUS BOARD OF DIRECTORS COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 Standing (L-R) Milivoje Nikolic, John Alexander Burbidge, Gaffar Hassam, Jeffrey Bookbinder, Sitting (L-R) Kate Maphage, Dan Neo Moroka, Tebelelo Seretse and Lynette Sybil Nikolic Tebelelo Seretse – Chairperson (Non-executive) Tebelelo Seretse is an economist and a lawyer by profession. She has been a Member of Parliament and has held the position of Cabinet Minister. Her contributions to society have been various and her political focus has been inclusive of women, youth and the plight for the needy. She has been a board member of Bank of Botswana and of various institutions in the public and private sector. Her economic, legal and financial training provides the group with valuable business advice and is a source of strength for the Group. Milivoje Nikolic – Group Managing Director (Executive) Milivoje Nikolic, (“Mike”) a Mechanical Engineer, is the Group’s Managing Director. Mike together with his wife Lynette are the founding shareholders and promoters. They first established Lyn’s Funeral Parlour (“Lyn’s”) in 1993 and thereafter expanded to Northern Botswana through the vehicle of Kagiso Funeral Parlour. Over the last seventeen years Mike has successfully made Lyn’s into a household name, the service provider of choice for funeral services throughout Botswana. 4 FSG Limited Annual Report 2009
  6. 6. Dan Neo Moroka (Independent and non-executive)Dan Neo Moroka is a Biologist by profession and has vast experience in Wildlife Biology. He is also a qualifiedbanker with extensive experience in the banking industry. He served as Agricultural Advisor to BarclaysBank of Botswana and was also involved in retail and corporate banking. He has been appointed ResidentDirector and Chief Executive Officer of De Beers Botswana on 1st February 2010. His responsibilities includestrategic direction including administration, legal and tax matters for all De Beers entities in Botswana. Hewas elected as Member of Parliament for Kgalagadi South and was Minister of Trade and Industry from endof 2004 to 2009. His past Board directorships include, among others, National Development Bank, Bank ofBotswana, BP Mozambique, BP Zambia, BP Southern Africa, Botswana Meat Commission (UK) HoldingsLondon and Botswana as well as the Debswana Diamond Mining Company. He was the winner of theinaugural Bank of Botswana “Banker of the Year” Award. He is the Chairman of the Investment Committee.Gaffar Hassam (Non-executive)Gaffar Hassam, is a fellow member of the Association of Chartered Certified Accountants (FCCA) and alsohas various insurance related qualifications. He joined Botswana Insurance Holdings Limited (BIHL) in April2003 and has held various positions within BIHL. He is currently the Chief Operating Officer of BotswanaLife Insurance Limited. He is the Chairman of the Remuneration Committee.Jeffrey Bookbinder (Independent and non-executive)Jeffrey Bookbinder is a partner at BookbinderKhan Attorneys in Gaborone, Botswana. He is an Attorney ofthe High Court of Botswana and is admitted as a solicitor in England and Wales as well as a barrister andsolicitor in Ontario, Canada. Jeffrey came to Botswana in 1990 to teach law at the University of Botswanaand entered private practice in 1992. He specialises in corporate/commercial law, securities, mergers andacquisitions and alternative dispute resolution. Jeffrey is the author of chapters on the law of Botswanain the following publications: - “Trade Marks – World Law and Practice Journal”, “International FinancialServices Law and Practice” and “Global Financial Regulators”.John Alexander Burbidge (Independent and non-executive)John Alexander Burbidge, a Chartered Accountant (UK), is a former Chief Executive Officer of BotswanaInsurance Holdings Limited and executive director of African Life Assurance Company (Zambia) Limitedresponsible for international operations. He has over 30 years experience in the financial services industry.He is also a non-executive director of Letshego Holdings Limited since 2002. He is the Chairman of theAudit & Risk Committee.Kate Maphage (Non-executive)Kate Maphage is an entrepreneur who is involved in businesses across a variety of sectors. She is a foundingmember of the consortium which formed Mascom Wireless and she subsequently led the Commercial andHuman Resource divisions of the company for a number of years. Kate serves on a number of boards andholds a Bachelor of Commerce and a Masters degree in Business Leadership.Lynette Sybil Nikolic (Non-executive)Lynette Sybil Nikolic is one of the founding shareholders and promoters of the Group. Prior to this she wasAssistant to the Group Company Secretary with Botswana Development Corporation Limited. Lynette hasbeen a director since inception and a key force behind the Group’s development. For the last six years shehas served the Group as a non-executive director. FSG Limited Annual Report 2009 5
  7. 7. FSG LIMITED PROSPECTUS FINANCIAL HIGHLIGHTS COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 In order to match cost to its related revenue necessitated by growth in the related line of the business, the following changes have been made in the current year and comparative information has been restated accordingly: The value of goods and services to customers under the funeral package scheme that was previously classified as income from package scheme has been classified as revenue. The goods and services rendered to customers under the funeral package scheme are the same as rendered to customers who are not under the funeral package scheme and hence the need to classify the two together. Certain expenses that are attributable to the production of goods for resale were previously included in administration expenses have been classified as cost of sales to fairly present the cost of goods sold and the resulting margin. The changes in the classification of items have no effect on the profit for the year and prior years. The detailed effect of these changes is reflected in note 10 of the group annual financial statements. After restatement 2004 2005 2006 2007 2008 2009 Revenue (Pula millions) 22.3 24.8 28.2 31.9 39.3 45.6 Income from package scheme (Pula millions) 7.0 8.8 9.8 13.8 15.5 18.3 Profit after tax (Pula millions) 5.5 6.7 8.4 10.4 12.2 13.8 Earnings per share (Pula) 0.07 0.08 0.10 0.12 0.13 0.12 Before restatement 2004 2005 2006 2007 2008 2009 Revenue (Pula millions) 18.8 20.5 22.5 25.5 31.5 34.6 Income from package scheme (Pula millions) 10.5 13.0 15.5 20.2 23.3 29.4 Profit after tax (Pula millions) 5.5 6.7 8.4 10.4 12.2 13.8 Earnings per share (Pula) 0.07 0.08 0.10 0.12 0.13 0.12 6 FSG Limited Annual Report 2009
  8. 8. After restatement Before restatement Income from package Income from package scheme scheme FSG Limited Annual Report 2009 7
  9. 9. FSG LIMITED PROSPECTUS CHAIRPERSON’S REPORT COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 I am pleased to present my report for the year ended 31 December 2009 to the shareholders of FSG Limited. Botswana and the global economy However, the government forecasts diamond revenues to recover to the level achieved in 2007 only by the year Global economy 2012-13. The global economic downturn triggered by the global financial crisis, continued in the first half of 2009 as growth Due to the monetary policies followed by the in major economies contracted. This affected trade government, inflation was kept under control and the flows and commodity prices. As a result of substantial year on year inflation in 2009 was 8.2% as compared economic stimulus provided by governments of major with 12.6% in the year 2008. The decline in inflation has economies to boost their respective economies, the resulted in a gradual reduction in interest rates by Bank global economy started showing signs of moderate of Botswana. recovery in the later half of 2009 and global demand, economic output and employment growth showed Botswana is still an investment destination of choice in positive signs towards the end of 2009. Africa and has a well-managed regulatory environment and a stable financial sector. As outlined in the 2010 Botswana economy Budget the government policy continues to focus on During the last two years due to the global financial and economic diversification, employment creation, poverty economic crisis, the demand for luxury goods, such reduction and the environment which are critical in as diamonds, declined and Botswana experienced a transforming the economy to deliver the benefits of decline in government revenues from exports. development to all. The partial recovery in the mining sector of the economy Financial performance during the third and fourth quarters of 2009 is expected Against the backdrop of the above economic to have a positive impact on the sector in 2010. perspective, the Group performed well during the year 8 FSG Limited Annual Report 2009
  10. 10. and revenue increased by 16% to 45.6 million. Profit the Investment Committee and the Remunerationfrom the package scheme increased by 18% to P18.3 Committee. A comprehensive section on corporatemillion. At the year-end the net asset value of the Group governance is provided elsewhere in this Annual Report.exceeded a record P100 million for the first time. Share priceNew operations I am pleased to report that the share price has seenIn Botswana, the Group established the state-of-the-art a continuous increase throughout the year, doublingMemorial Park, in Phakalane, Gaborone, and the first of since listing.its kind in Botswana. The cemetery is comparable withworld standards. We shall endeavor to make it possible Social Responsibilityfor the community to avail itself of the benefits of the During the year under review the Group companiesprivate cemetery at affordable prices. participated in community programs throughout Botswana and employees of the Group organizedIn Zambia, the construction of the Group’s new funeral events to assist in community development programs.parlour and administrative office in Lusaka is nearingcompletion and will be fully functional by July 2010. AcknowledgementA separate insurance office has been established to I would like to welcome the two new directors appointedmarket funeral insurance policies together with African during the year, namely Mr. Dan Neo Moroka andLife Assurance Company (Zambia) Limited. Mr. Jeffrey Bookbinder. I look forward to their vision, guidance and input which will benefit the Group in theWe are exploring opportunities elsewhere in sub- years ahead.Saharan Africa. I also take this opportunity to acknowledge theCorporate Governance contribution over many years of the two retiring directorsThe Board and management have responsibility for Ms. Margaret Mosojane and Ms. Tersia Stellenberg.ensuring that the Group’s businesses are managedand conducted in accordance with corporate law I personally acknowledge and thank my Board for theirand applicable business standards and regulations, vision, support and guidance throughout the year andincluding the responsibility to ensure that: also the commitment and dedication of management and staff which have contributed to the excellent results⚫ the business is managed on best current practices achieved. of corporate governance, sound business principles and effective risk management based on the King Finally, I must record my gratitude to all our customers III report; for entrusting us with their business and assure them⚫ adequate and effective internal controls exist at all that “We Care”. times to continuously monitor business operations; and Thank you.⚫ the business operates as a going concern and generates maximum return for all stakeholders.In line with this, the Board is assisted by three Board Tebelelo Seretsecommittees, namely, the Audit and Risk Committee, CHAIRPERSON FSG Limited Annual Report 2009 9
  11. 11. FSG LIMITED PROSPECTUS GROUP MANAGING COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008 DIRECTOR’S REPORTDate of Issue of this Prospectus 18 August 2008 It gives me great pleasure to present my second report to shareholders since the company was listed on the Botswana Stock Exchange. Business overview and financial performance Profit: The Group’s profit before tax at P17.5 million was 16% Revenue and profit share from insurance package higher than the previous year. scheme: Despite the year under review being characterised by Review of operations adverse economic conditions, the Group has performed We completed the construction of the first private most satisfactorily. cemetery in Botswana at Phakalane, Gaborone (Phomolong Memorial Park) and it was officially The Group’s revenue at P45.6 million was 16% higher launched in September. The unique concept of a private than the prior year and profit share from the insurance cemetery has been well-received in the market. package scheme which is underwritten by Botswana Life Insurance Limited resulted in a growth of 18%. Together with Botswana Life Insurance Limited (BLIL) we have developed a Phomolong product which will enable Expenses: customers at affordable prices to purchase graves and Administration expenses for the year increased by tombstones. It will facilitate families to pre-own graves 18% over that of 2008, as the Group is building its on payment of an affordable monthly premium. Graves infrastructure in terms of property, plant and equipment can also be purchased by cash customers as the need and manpower to meet its future business expansionary arise. needs in Botswana, Zambia and elsewhere. Our focus and endeavor to align our funeral insurance 10 FSG Limited Annual Report 2009
  12. 12. products with our customer needs have yielded positive Looking aheadresults and our new products introduced last year have We are researching the establishment of other branchesbeen well received. We also introduced a Monthly in Botswana, notably in Palapye. We are also planningIncome Benefit insurance product which provides much the development of a private cemetery in Francistownneeded support to bereaved families for one year. and also looking at other towns within Botswana.During the year we have expanded our manufacturing We shall focus on expanding our funeral insurance basefacility in Gaborone and also increased the warehousing in Zambia and thus replicating the success in Botswana.space for finished goods. We have set up a new stateof the art call centre which is assisting us to market our We are exploring other business opportunities on theproducts, obtain feed-back from customers, improve African continent.our customer service and also learn further about theneeds of our customers. Acknowledgments I would like to thank my Board of Directors for their wiseIn our recently completed administration office, we counsel and support during the year and also welcomehave set up a secure and modern computer facility that two new directors, namely Mr. Dan Neo Moroka andsupports our operations on-line across all countries. Mr. Jeffrey Bookbinder. I also wish to acknowledgeWe are in the process of implementing new Enterprise the contribution from retiring directors Ms. MargaretResource Planning software which will provide us with Mosojane and Ms. Tersia Stellenberg over many yearsan integrated business solution, catering to our present which have benefitted the Group. I acknowledgeand future business needs. the assistance and support we have received from Botswana Life Insurance Limited throughout ourZambia: association.Our new funeral parlour in Lusaka which includes amortuary, a chapel, and an administrative office will be I also wish to thank my management team and staff forcompleted in July 2010. Within the same premises we their hard work, dedication and commitment to ensuringpropose to establish a casket assembly plant to which that our valued customers receive the personal, caring,we shall supply semi-knocked down kits from our compassionate and dignified service that they richlymanufacturing plant in Gaborone. We expect to achieve deserve.substantial benefits from this project. I look forward to the challenges and opportunities in theDuring the year, we also established an insurance year ahead and I am confident of continued success inoffice from where we have started marketing insurance the future.products together with African Life Assurance Company(Zambia) Limited. Thank you all.In January 2010, we sold 30% shareholding in FSG(Zambia) Limited to a consortium of prominent localbusinessmen who shall be assisting the Group ___________________in expanding the business in Zambia. We expect Milivoje Nikolicsignificant benefits to materialise in the future. GROUP MANAGING DIRECTOR FSG Limited Annual Report 2009 11
  13. 13. FSG LIMITED PROSPECTUS CORPORATE GOVERNANCE COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 Approach to governance The Chairperson of the Board is a non-executive FSG Limited is committed to the principles of Director. There is a clear distinction in the role and transparency, accountability, integrity and best practices responsibility between the Chairperson and the Group in the conduct of its business as set out in the Botswana Managing Director. Stock Exchange Code of Best Practice on corporate governance. The Board of directors is cognisant of this The Board meets at least four times a year and responsibility and is aware that the Board is ultimately is responsible for establishing strategies, guiding responsible and accountable for the management and corporate strategy, taking decisions on business the conduct of the business of the Group. development, assessing and reviewing performance, authorizing capital expenditure for business expansion The Directors are satisfied that the Group has adopted and ensuring compliance with laws and regulations. the best practices in the conduct of its business and the Board members continually endeavor to ensure that the Each year, one-third of the directors retire by rotation Group’s policies on corporate governance continue to and are eligible for re-election subject to the approval of match global best practices. the shareholders of the company. Whilst the executive Directors are responsible for the Company secretary and professional advice day-to-day management of the Group, the Board All directors have unlimited access to the services of the recognises that delegation of authority to Management Company Secretaries who are responsible to the Board and/or committees of the Directors do not, in any for ensuring that proper Board procedures are followed. manner, dissipate or mitigate the responsibility of the Board collectively and that of individual Director’s of All directors are entitled to seek independent professional their responsibilities. advice concerning the affairs of the company at the company’s expense. The Board is responsible for ensuring that in managing the affairs of the Group they act independently and in Annual financial statements a manner that they reasonably believe to be in the best The Directors are responsible for monitoring the interest of the business of the Group and that of its preparation of the annual financial statements, and stakeholders and in compliance with all applicable laws are also responsible for the approval of these financial and regulations. This will involve establishing strategies, statements, thereby ensuring that they fairly present the effective decision-making, establishing internal controls affairs of the Group and the company for the financial and systems, compliance checking, effective reporting year under review. and performance evaluation. The external auditors are responsible for expressing an Directorate opinion on the financial statements based on their audit. The Constitution of the company provides for a minimum of four directors. The current Board of The annual financial statements set out in this report directors comprises eight directors; four non-executive, have been prepared by Management in accordance three independent non-executive, and one executive with International Financial Reporting Standards and the director. Companies Act of Botswana (Companies Act, 2003). 12 FSG Limited Annual Report 2009
  14. 14. Board Committees Executive directors play no part in decisions regardingTo assist the Board in discharging its responsibilities, their own remuneration.the following Board committees were formed namely:⚫ The Audit and Risk Committee; Investment Committee⚫ The Remuneration Committee; and The Investment Committee was established during the⚫ The Investment Committee year and comprises: Chairperson: Dan Neo MorokaEach committee of the Board is constituted with a Members: John BurbidgeCharter which determines its membership, purpose, Milivoje Nikolicscope of its mandate, powers and authority. The Committee reviews new projects and investmentAudit and Risk Committee proposals for recommendation to the Board.The Audit and Risk Committee comprises:Chairperson: John Burbidge Internal controlMembers: Lynette Sybil Nikolic The Board of Directors and Management are Gaffar Hassam responsible for implementing appropriate internal control systems. Internal control comprises methodsThe external auditors have free access to the Chairman and procedures designed by Management to assistof the committee and are permanent invitees to the in achieving the objectives of safeguarding assets,meetings and deliberations of the Committee. The detecting and preventing fraud and error, and ensuringCommittee has unrestricted access to the Group’s the accuracy and completeness of accounting records.accounting records. These systems assist in reducing, but do not eliminate, the possibility of fraud and error.The function of the Committee is to assist the Boardin discharging its functions under the Companies Act To fulfill its responsibilities, Management maintainsand Common Law. In particular it monitors financial adequate accounting records and has developed,controls, accounting systems, reviews accounting and continues to maintain a system of internalpolicies, and recommends the approval of the annual controls. The Directors’ report that the Company’sfinancial statements to the Board of Directors. internal controls and systems are designed to provide reasonable assurance as to the integrity and reliabilityThe Committee monitors the company’s risk profile and of the financial statements. These controls adequatelymakes appropriate recommendations. The Committee safeguard, verify and maintain accountability of assetsalso monitors the ethical conduct of the Group, its and are implemented by trained and skilled personnel.executives and senior officials. Nothing has come to the attention of the company’sRemuneration Committee Directors to indicate that any material breakdown in theThe Remuneration Committee comprises: functioning of these controls, procedures and systemsChairperson: Gaffar Hassam has occurred during the year under review.Members: Kate Maphage Jeffery Bookbinder Succession planning The Group is committed to ensuring that its staff andThe Committee approves the remuneration of the management are given the necessary training to enableDirectors, executives and employees and seeks to them to develop their skills and to progress to higherprovide appropriate and fair rewards and incentives. positions within the Group. FSG Limited Annual Report 2009 13
  15. 15. FSG LIMITED PROSPECTUS COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003 MAJOR SHAREHOLDERS’ AT 31 DECEMBER 2009Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 Number of Shares held % 1. Botswana Life Insurance Limited 28,358,069 23.63 2. Dusa Investments (Proprietary) Limited 21,972,000 18.31 3. Lynette Sybil Nikolic 8,000,000 6.67 4. Milivoje Nikolic 8,000,000 6.67 5. Kate Maphage 7,262,500 6.05 6. Stanbic Nominees Re: AG BPOPF 6,469,981 5.39 7. Petronella Matumo 4,850,000 4.04 8. Stanbic Nominees Re: CF BPOPF 4,765,000 3.97 9. Tersia Cheryl Stellenberg 4,440,000 3.70 10. Allied Investments (Proprietary) Limited 3,000,000 2.50 _________ 97,118,250 ======== Percent of total shares in issue 80.93 14 FSG Limited Annual Report 2009
  16. 16. FSG Limited Annual Report 2009 15
  17. 17. FSG LIMITED PROSPECTUS COMPANY NO. 2003/5108 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 Group Annual Financial Statements For the year ended 31 December 2009 16 FSG Limited Annual Report 2009
  18. 18. FSG LIMITED MANAGEMENT REPORTGROUP ANNUAL FINANCIAL STATEMENTS31 DECEMBER 2009Contents: Page No.Directors’ statement of responsibility 18Directors’ approval of the annual financial statements 18Independent auditor’s report 19Statements of comprehensive income 20Statements of financial position 21Statements of changes in equity 22Statements of cash flows 23Notes to the annual financial statements 24 - 49 FINANCIAL REPORT OTHER INFORMATION FSG Limited Annual Report 2009 17
  19. 19. FSG LIMITED FSG LIMITED GROUP ANNUAL FINANCIAL STATEMENTS PROSPECTUS COMPANY NO. 2003/5108 31 DECEMBER 2009 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 Directors responsibility statement The directors are responsible for the preparation and fair presentation of the annual financial statements of FSG Limited and the FSG Group, comprising the statement of financial position and consolidated statement of financial position at 31 December 2009, and the statement of comprehensive income and consolidated statement of comprehensive income, the statement of changes in equity and consolidated statement of changes in equity and statement of cashflows and consolidated statement of cashflows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the directors report, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Botswana (Companies Act, 2003). The directors are required by the Companies Act of Botswana (Companies Act, 2003), to maintain adequate accounting records and are responsible for the content and integrity of and related financial information included in this report. It is their responsibility to ensure that the annual financial statements and consolidated annual financial statements fairly present the state of affairs of the company and group as at the end of the financial year and the results of their operations and cash flows for the year then ended, in conformity with IFRS. The external auditors are engaged to express an independent opinion on the annual financial statements and their unmodified report is presented on page 19. The directors responsibilities include: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The annual financial statements are prepared in accordance with IFRS and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates. The directors responsibilities also include maintaining adequate accounting records and an effective system of risk management as well as the preparation of the supplementary schedules included in these financial statements. The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the group and all employees are required to maintain the highest ethical standards in ensuring the business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the group is on identifying, assessing, managing and monitoring all known forms of risk across the group. While operating risk cannot be fully eliminated, the directors endeavour to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The directors have made an assessment of the and groups ability to continue as a going concern and there is no reason to believe the business will not be a going concern in the year ahead. The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. Directors approval of the annual financial statements Against this background, the directors accept responsibility for the annual financial statements on pages 20 to 49 which were approved on 23 March 2010 and signed on its behalf by: ________________________ ____________________________ Tebelelo Seretse Milivoje Nikolic Chairperson of the Board Group Managing Director 18 FSG Limited Annual Report 2009
  20. 20. MANAGEMENT REPORTINDEPENDENT AUDITORS REPORTTO THE MEMBERS OF FSG LIMITEDReport on the Financial StatementsWe have audited the accompanying company and group annual financial statements of FSG Limited, set out onpages 20 to 49, which comprise the statement of financial position and consolidated statement of financial positionat 31 December 2009, and the statement of comprehensive income and consolidated statement of comprehensiveincome, the statement of changes in equity and consolidated statement of changes in equity and statement of cashflows and consolidated statement of cash flows for the year then ended, and a summary of significant accountingpolicies and other explanatory notes. Responsibility for the Financial StatementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordancewith International Financial Reporting Standards and in compliance with the Companies Act of Botswana(Companies Act, 2003).This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation andfair presentation of financial statements that are free from material misstatement, whether due to fraud or error;selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.Auditors ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our auditin accordance with International Standards on Auditing. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are FINANCIAL REPORTfree from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditors judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.OpinionIn our opinion, the financial statements present fairly, in all material respects the financial position of the company andthe group as at 31 December 2009, and of their financial performance and cash flows for the year then ended inaccordance with International Financial Reporting Standards and in the manner required by the Companies Act ofBotswana (Companies Act, 2003). OTHER INFORMATION23 March 2010 FSG Limited Annual Report 2009 19
  21. 21. FSG LIMITED PROSPECTUS FSG LIMITED COMPANY NO. 2003/5108 STATEMENTS OF COMPREHENSIVE INCOME FOR YEAR ENDED 31 DECEMBER 2009 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 GROUP COMPANY Restated Restated Pula Pula Pula Pula Notes 2009 2008 2009 2008 Revenue 5 45,626,532 39,325,507 - - Cost of sales (13,367,267) (11,150,139) - - Gross profit 32,259,265 28,175,368 - - Income from package scheme 6 18,345,221 15,484,105 - - Other operating income 737,417 264,380 400,000 - Investment revenue 8 2,197,949 1,482,282 4,803,008 7,242,214 Marketing expenses (675,504) (237,351) - - Occupancy expenses (2,062,775) (1,799,080) - - Administration expenses (32,663,587) (27,698,524) (172,339) (52,964) Finance costs 9 (632,308) (600,741) - - Profit before tax 12 17,505,678 15,070,439 5,030,669 7,189,250 Income tax expense 11 (3,689,513) (2,894,050) (97,080) (45,848) Profit for the year 13,816,165 12,176,389 4,933,589 7,143,402 Other comprehensive income Gain on revaluation of property, plant and equipment - 10,024,698 - - Exchange difference on translating foreign operations (464,504) (399,080) - - Income tax on components of other comprehensive income - (2,112,673) - - Other comprehensive income for the year (464,504) 7,512,945 - - Total comprehensive income for the year 13,351,661 19,689,334 4,933,589 7,143,402 Earnings per share Basic (Pula per share) 13 0.12 0.13 Diluted (Pula per share) 13 0.11 0.13 20 FSG Limited Annual Report 2009
  22. 22. MANAGEMENT REPORTFSG LIMITEDSTATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2009 GROUP COMPANY Pula Pula Pula PulaASSETS Notes 2009 2008 2009 2008Non-current assetsProperty, plant and equipment 14 74,844,502 56,879,538 - -Goodwill 15 27,080,631 27,189,768 - -Deferred tax assets 11 104,546 21,909 - -Investment in subsidiaries - - 65,683,507 39,473,507Loan to related party 16 924,426 924,426 - -Inventories 17 3,457,143 - - -Total non-current assets 106,411,248 85,015,641 65,683,507 39,473,507Current assetsInventories 17 4,343,340 4,174,705 - -Trade and other receivables 18 3,013,396 2,408,221 2,942,152 28,949,654Current tax assets 9,450 - - -Bank and cash balances 13,714,554 39,664,048 19,043 10,013Total current assets 21,080,740 46,246,974 2,961,195 28,959,667Total assets 127,491,988 131,262,615 68,644,702 68,433,174 FINANCIAL REPORTEQUITY AND LIABILITIESCapital and reservesStated capital 19 68,301,000 68,301,000 68,301,000 68,301,000Reserves 11,337,945 11,682,449 - -Retained earnings 25,677,949 16,661,784 146,755 13,166Total capital and reserves 105,316,894 96,645,233 68,447,755 68,314,166Non-current liabilitiesDeferred tax liabilities 11 5,706,938 5,569,326 - -Current liabilitiesTrade and other payables 21 8,821,536 8,848,634 24,054 47,500Provisions 22 2,399,092 1,380,732 55,000 44,000Bank overdraft 23 3,669,975 2,339,763 20,779 -Borrowings 20 - 15,000,000 - -Current tax liabilities 1,577,553 1,478,927 97,114 27,508Total current liabilities 16,468,156 29,048,056 196,947 119,008Total liabilities 22,175,094 34,617,382 196,947 119,008 OTHER INFORMATIONTotal equity and liabilities 127,491,988 131,262,615 68,644,702 68,433,174 FSG Limited Annual Report 2009 21 6
  23. 23. 2008 FSG LIMITED22 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2009 Date of Issue of this Prospectus 18 August 2008 Pula FSG LIMITED PROSPECTUS GROUP Stated capital Revaluation Equity-settled Foreign Total reserves Retained Total COMPANY NO. 2003/5108 reserve employee currency earnings benefit reserve translation reserve INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003 Balance at 1 January 2008 34,001,000 4,209,038 - 79,176 4,288,214 11,425,509 49,714,723 Date of registration of this Prospectus at the office of the Registrar of Companies 18 August Shares issued during the year 36,000,000 - - - - - 36,000,000 Share issue costs (1,700,000) - - - - - (1,700,000) Total comprehensive income for the year - 7,912,025 - (399,080) 7,512,945 12,176,389 19,689,334 Transfer on disposal of revalued assets - (118,710) - - (118,710) 118,710 - Dividends declared and paid - - - - - (7,058,824) (7,058,824) Balance at 31 December 2008 68,301,000 12,002,353 - (319,904) 11,682,449 16,661,784 96,645,233 Recognition of share-based payments - - 120,000 - 120,000 - 120,000 Total comprehensive income for the year - - - (464,504) (464,504) 13,816,165 13,351,661 Dividends declared and paid - - - - (4,800,000) (4,800,000) Balance at 31 December 2009 68,301,000 12,002,353 120,000 (784,408) 11,337,945 25,677,949 105,316,894 COMPANY Balance at 1 January 2008 34,001,000 - - - - (71,412) 33,929,588 Shares issued during the year 36,000,000 - - - - - 36,000,000FSG Limited Annual Report 2009 Share issue costs (1,700,000) - - - - - (1,700,000) Total comprehensive income for the year - restated - - - - - 7,143,402 7,143,402 Dividends declared and paid - restated - - - - - (7,058,824) (7,058,824) Balance at 31 December 2008 as previously stated 68,301,000 - - - - 13,166 68,314,166 Total comprehensive income for the year - - - - - 4,933,589 4,933,589 Dividends declared and paid - - - - - (4,800,000) (4,800,000) Balance at 31 December 2009 68,301,000 - - - - 146,755 68,447,755
  24. 24. MANAGEMENT REPORTFSG LIMITEDSTATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2009 GROUP COMPANY Restated Pula Pula Pula Pula 2009 2008 2009 2008Cash flows from operating activitiesProfit before tax 17,505,678 15,070,439 5,030,669 7,189,250Adjusted for:Interest received (2,197,949) (1,482,282) (3,008) (183,390)Finance costs 632,308 600,741 - -Recognition of share-based payments 120,000 - - -Increase in provisions 1,018,360 1,380,732 11,000 44,000Depreciation of property, plant and equipment 3,272,728 3,214,803 - -Gain on disposal of property, plant and equipment (625,301) (68,091) - -Operating income before working capital changes 19,725,824 18,716,342 5,038,661 7,049,860Movement in inventories (3,604,490) (964,973) - -Movement in trade and other receivables (599,769) 1,740,278 26,007,502 (27,162,937)Movement in trade and other payables (43,395) 1,406,467 (23,446) (2,783,103)Cash generated from/(utilised in) operations 15,478,170 20,898,114 31,022,717 (22,896,180)Income taxes paid (3,542,423) (1,711,134) (27,474) (18,340) FINANCIAL REPORTNet cash generated by/(used in) operating activities 11,935,747 19,186,980 30,995,243 (22,914,520)Cash flows from investing activitiesPurchase of property, plant and equipment (22,156,953) (11,708,058) - -Interest received 2,197,949 1,482,282 3,008 183,390Investment in subsidiaries - - (26,210,000) (4,500,181)Foreign currency translation reserve - (399,081) - -Proceeds on disposal of property, plant and equipment 1,817,845 568,844 - -Net cash used in investing activities (18,141,159) (10,056,013) (26,206,992) (4,316,791)Cash flows from financing activitiesProceeds from issue of equity shares - 36,000,000 - 36,000,000Payment for share issue costs - (1,700,000) - (1,700,000)Interest-bearing borrowings repaid (15,000,000) - - -Interest paid (note 9) (1,188,078) (2,157,591) - -Dividends paid (4,800,000) (7,058,824) (4,800,000) (7,058,824)Net cash (used in)/generated by financing activities (20,988,078) 25,083,585 (4,800,000) 27,241,176Net movement in cash and cash equivalents (27,193,490) 34,214,552 (11,749) 9,865Exchange difference on the balance of cash held in foreigncurrencies (86,216) - - - OTHER INFORMATIONCash and cash equivalents at the beginning of the year 37,324,285 3,109,733 10,013 148Cash and cash equivalents at the end of the year 10,044,579 37,324,285 (1,736) 10,013Represented by:Bank and cash balances 13,714,554 39,664,048 19,043 10,013Bank overdraft (3,669,975) (2,339,763) (20,779) - 10,044,579 37,324,285 (1,736) 10,013 FSG Limited Annual Report 2009 8 23
  25. 25. FSG LIMITED FSG LIMITED PROSPECTUS NOTES TO THE ANNUAL FINANCIAL STATEMENTS COMPANY NO. 2003/5108 31 DECEMBER 2009 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 1. General information FSG Limited (“the Company”) is a public Company incorporated in Botswana. The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report. The Company through its wholly-owned subsidiaries (all collectively, “the Group”), namely, M & N Coffin and Casket Manufacturers (Proprietary) Limited, Kagiso Funeral Parlour (Proprietary) Limited, FSG (Zambia) Limited (a Company registered in Zambia), Botswana Funeral Services Group (Proprietary) Limited (a Company registered in South Africa), carries on the principal business activity of manufacturing and retail of coffins and caskets, provision of funeral related services and provision of funeral insurance in partnership with Botswana Life Insurance Limited. The Company has another wholly owned subsidiary namely, Private Cemeteries (Proprietary) Limited (formerly known as Jorde’ (Proprietary) Limited that is engaged in the business of establishing and managing private cemeteries in Botswana. 2. Adoption of new and revised Standards 2.1 Standards and interpretations effective in the current period In prior year the Group early adopted some of the standards and interpretations that are effective in current year. In the current period the following standards were adopted: New International Financial Reporting Standards Effective Date Annual periods beginning on or after 1 January IFRS 7 – Financial Instruments: Disclosures 2009 Annual periods beginning on or after 1 January IFRS 8 – Operating segments 2009 IAS 20 – Accounting for government grants and disclosure Annual periods beginning on or after 1 January of government assistance 2009 Annual periods beginning on or after 1 January IAS 40 – Investment property 2009 Annual periods beginning on or after 1 January IAS 41 – Agriculture 2009 Except for IFRS 8 – Operating segments, which required additional disclosures, the adoption of these standards has not had any impact on Group’s accounting policies. 2.2 Standards and interpretations in issue not yet adopted New/Revised International Financial Reporting Standards Effective Date IFRS 1 - First-time Adoption of International Financial Reporting Annual periods beginning on or after 1 July 2009 Standards - Revised and restructured IFRS 1 - First-time Adoption of International Financial Reporting Annual periods beginning on or after 1 January Standards - Amendments relating to oil and gas assets and 2010 determining whether an arrangement contains a lease 24 FSG Limited Annual Report 2009
  26. 26. FSG LIMITED MANAGEMENT REPORTNOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)31 DECEMBER 2009 New/Revised International Financial Reporting Standards Effective Date IFRS 1 - First-time Adoption of International Financial Reporting Standards - Limited Exemption from Comparative IFRS 7 Annual periods beginning on or after 1 July 2010 Disclosures for First-time Adopters IFRS 2 - Share-based Payment - Amendments resulting from Annual periods beginning on or after 1 July 2009 April 2009 Annual Improvements to IFRSs IFRS 2 - Share-based Payment - Amendments relating to Annual periods beginning on or after 1 January group cash-settled share-based payment transactions 2010 IFRS 3 - Business Combinations - Comprehensive revision on Annual periods beginning on or after 1 July 2009 applying the acquisition method IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations - Amendments resulting from May 2008 Annual Annual periods beginning on or after 1 July 2009 Improvements to IFRSs IFRS 5 - Non-current Assets Held for Sale and Discontinued Annual periods beginning on or after 1 January Operations - Amendments resulting from April 2009 Annual 2010 Improvements to IFRSs FINANCIAL REPORT IFRS 8 - Operating Segments - Amendments resulting from Annual periods beginning on or after 1 January April 2009 Annual Improvements to IFRSs 2010 Annual periods beginning on or after 1 January IFRS 9 - Financial Instruments - Classification and Measurement 2013 IAS 1 - Presentation of Financial Statements - Amendments Annual periods beginning on or after 1 January resulting from April 2009 Annual Improvements to IFRSs 2010 IAS 7 - Statement of Cash Flows - Amendments resulting from Annual periods beginning on or after 1 January April 2009 Annual Improvements to IFRSs 2010 IAS 17 – Leases - Amendments resulting from April 2009 Annual periods beginning on or after 1 January Annual Improvements to IFRSs 2010 Annual periods beginning on or after 1 January IAS 19 – Employee benefits 2010 IAS 24 - Related Party Disclosures - Revised definition of Annual periods beginning on or after 1 January related parties 2011 IAS 27 - Consolidated and Separate Financial Statements - Consequential amendments arising from amendments to Annual periods beginning on or after 1 July 2009 OTHER INFORMATION IFRS 3 IAS 28 - Investments in Associates - Consequential Annual periods beginning on or after 1 July 2009 amendments arising from amendments to IFRS 3 IAS 31 - Interests in Joint Ventures - Consequential Annual periods beginning on or after 1 July 2009 amendments arising from amendments to IFRS 3 IAS 32 - Financial Instruments: Presentation - Amendments Annual periods beginning on or after 1 February relating to classification of rights issues 2010 IAS 36 - Impairment of Assets - Amendments resulting from Annual periods beginning on or after 1 January April 2009 Annual Improvements to IFRSs 2010 FSG Limited Annual Report 2009 25
  27. 27. FSG LIMITED FSG LIMITED PROSPECTUS NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED) COMPANY NO. 2003/5108 31 DECEMBER 2009 INCORPORATED IN THE REPUBLIC OF BOTSWANA ON 7 AUGUST 2003Date of registration of this Prospectus at the office of the Registrar of Companies 18 August2008Date of Issue of this Prospectus 18 August 2008 New/Revised International Financial Reporting Standards Effective Date IAS 38 - Intangible Assets - Amendments resulting from April Annual periods beginning on or after 1 July 2009 2009 Annual Improvements to IFRSs IAS 39 - Financial Instruments: Recognition and Measurement Annual periods beginning on or after 1 July 2009 - Amendments for eligible hedged items IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for embedded derivatives when reclassifying Annual periods ending on or after 30 June 2009 financial instruments IAS 39 - Financial Instruments: Recognition and Measurement Annual periods beginning on or after 1 January - Amendments resulting from April 2009 Annual Improvements 2010 to IFRSs 2.2 Standards and interpretations in issue not yet adopted (continued) IFRIC Interpretation Effective Date November 2009 amendment with respect to IFRIC 14 - IAS 19 – The Limit on a Defined Benefit Asset, voluntary prepaid contributions is effective for Minimum Funding Requirements and their Interaction annual periods beginning on or after 1 January 2011 Annual periods beginning on or after 1 July IFRIC 17 - Distributions of Non-cash Assets to Owners 2009 IFRIC 18 - Transfers of Assets from Customers Transfers received on or after 1 July 2009 IFRIC 19 - Extinguishing Financial Liabilities with Equity Annual periods beginning on or after 1 July Instruments 2010 The adoption of these standards will not have an impact on the Group’s accounting policies. 3. Significant accounting policies 3.1 Statement of compliance The financial statements have been prepared in accordance with the International Financial Reporting Standards and the Companies Act of Botswana (Companies Act, 2003). 3.2 Basis of preparation The financial statements have been prepared on the historical cost basis, except for revaluation of certain non-current assets. The principal accounting policies are set out below. 3.3 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired during the year are included in the consolidated financial statements from the effective date of acquisition. 26 FSG Limited Annual Report 2009
  28. 28. FSG LIMITED MANAGEMENT REPORTNOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)31 DECEMBER 20093. Significant accounting policies (continued)3.3 Basis of consolidation (continued)All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the businesscombination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilitiesincurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus anycosts directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingentliabilities that meet the conditions for recognition under IFRS 3 Business Combinations are recognised at their fairvalues at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for salein accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are recognised andmeasured at fair value less costs to sell.3.4 Business combinationsGoodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of thecost of the business combination over the Group’s interest in the fair value of the identifiable assets, liabilities andcontingent liabilities recognised. If, after re-assessment, the Group’s interest in the net fair value of the acquiree’sidentifiable assets, liabilities, and contingent liabilities exceeds the cost of the business combination, the excess isrecognised immediately in statement of comprehensive income. FINANCIAL REPORT3.5 GoodwillGoodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’sinterest in the net fair value of the identifiable assets, liabilities, and contingent liabilities of the subsidiary or jointlycontrolled entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and issubsequently measured at cost less any accumulated impairment losses.For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash generating units expectedto benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated aretested for impairment annually, or more frequently when there is an indication that the unit may be impaired.If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairmentloss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assetsof the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised forgoodwill is not reversed in a subsequent period.On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in thedetermination of the profit or loss on disposal.3.6 Revenue recognition OTHER INFORMATIONRevenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimatedcustomer returns, rebates and other similar allowances.3.6.1 Sale of goodsRevenue from the sale of goods is recognised when all the following conditions are satisfied:⚫ The Group has transferred to the buyer significant risks and rewards of ownership of the goods;⚫ The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;⚫ The amount of revenue can be measured reliably;⚫ It is probable that the economic benefits associated with the transaction will flow to the entity; and⚫ The costs incurred or to be incurred in respect of the transaction can be measured reliably. FSG Limited Annual Report 2009 27

×